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Thursday, February 22, 2024
Courthouse News Service
Thursday, February 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Irrevocable Trusts Are Just That, Court Rules

(CN) - In what a California appeals court called a "case of buyer's remorse," a Lompoc woman violated an irrevocable trust by claiming a share of property after her husband died.

Joe and Manuela Aguilar established a trust in 1992 that became irrevocable after either spouse died. When Joe Aguilar passed away two years later, Manuela Aguilar transferred half of the joint property - consisting of a house in Lompoc - into her own trust. She willed everything to her only child, substantially reducing the inheritance for Joe's seven other children.

When a stepson sued, the superior court upheld Manuela Aguilar's actions. When he appealed, the appellate court reversed the decision and determined that she had breached the trust.

The appeals court pointed to a letter, which both spouses had signed, from the Aguilar's lawyer clarifying the unusual nature of setting up a trust that became irrevocable. The trust's intention was clear: to evenly divide the couple's property between all eight children and stepchildren. Although Manuela Aguilar had a "change of heart," as the court put it, she is not allowed to alter what she had already agreed to. "Irrevocable trusts are binding, even on their trustors," Judge Marjorie Laird Carter wrote.

Although Manuela Aguilar isn't allowed to take the house for herself, she may still enjoy it, the court concluded. The court also denied the stepson's request for attorney fees, saying that he had not cited specific authority to do so.

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